PWC still bullish on Africa retail

PWC remains bullish on Africa’s retail prospects. High GDP growth rates and low market saturation are two of the main reasons. Angola, Nigeria and Ethiopia have seen above 7% growth rates from 2000-2014. However, the downturn in community prices will have a big impact on Africa’s retail growth and there is concern about rising supply chain cost, particular in Nigeria where South African Woolworths and Truworths have recently exited.

Traditional trade (or informal) will continue to contribute the largest percentage of sales (90%). However, modern trade is growing in key markets such as Nigeria, Kenya and Ghana. The lack of infrastructure (e.g. shopping malls) remains a concern and will damper growth and increase retail cost. African countries are urbanising rapidly but are still catching up to their Asian and South American counterparts. African economies are also struggling from poor infrastructure, increased complexity (e.g. ports) and regulations. This will all contribute to increased supply chain cost.

Local sourcing will remain key to reduce costs, but companies are still struggling to identify quality and reliable suppliers. Furthermore, it is unclear if rising supply chain risk due to terrorists attracts in West Africa were factored in.